From: Jerry Clousson [jclousson@lowis-gellen.com]
Sent: Wednesday, December 18, 2002 5:33 PM
To: rule-comments@sec.gov
Subject: S7-45-02
December 18, 2002
Via Electronic Mail
Mr. Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C., 20549
Dear Mr. Katz:
Thank you for the opportunity to provide comments to the Securities and
Exchange Commission's ("Commission") proposed rule and commentary on the
"Implementation of Standards of Professional Conduct for Attorneys"
("Proposed Rule").
It is apparent that one of the purposes of the Sarbanes-Oxley Act of 2002
and the Proposed Rule is to prevent the recurrence of recent events
involving Andersen, Enron, Tyco and other companies involved in the current
spate of corporate scandals. Clearly, the actions and inactions of attorneys
employed and retained by these companies have contributed to the scandals.
The question remains-would the Proposed Rule have prevented or compelled a
different result? After reading the Proposed Rule, my answer to this
question is no.
The Proposed Rule presupposes that certain circumstances will rarely arise:
· "The Commission is confident that supervisory attorneys will satisfy their
reporting obligations under the rule, and that the instances when a subordinate
attorney disagrees with the supervisory attorney's actions will be exceedingly
rare."
· "It should be truly extraordinary for an attorney reporting evidence of a
material violation to receive an inappropriate response-one, for example,
that simply asserted that the reported evidence is no cause for concern
without any hint of evaluation or inquiry-or to receive no response at all
within a reasonable time."
· "In the extreme and unlikely event that the issuer's audit committee,
some other committee of the issuer's board of directors, or the full board
of directors does not provide an appropriate response within a reasonable
time, it may be essential for the reporting attorney to prepare and retain
a contemporaneous written record documenting those circumstances."
As recent events demonstrate, such circumstances are, unfortunately, not rare.
It is therefore recommended that the Proposed Rule be modified to more
appropriately address and more effectively deter such incidents.
Furthermore, the Proposed Rule's amended standards of professional conduct
are applicable to attorneys who are employed or retained by issuers. Attorneys
who are employed or retained by public accounting firms are thus not subject
to these amended standards. It is therefore recommended that the Proposed
Rule be modified to address the professional conduct of attorneys who represent
entities that are subject to oversight or regulation by the Commission.
Sincerely,
Jerry Clousson
Lowis & Gellen
200 West Adams
Suite 1900
Chicago, Illinois 60606
312-364-2500